Business leaders accused Alistair Darling yesterday of exaggerating the risks of a recession and said that his doom-laden prophecy could become self-fulfilling.

In an unusual reversal of roles, the CBI and economists rejected the Chancellor’s claim that Britain faced the worst economic conditions for 60 years and criticised him for failing to emphasise the fundamental strengths of the economy.

Richard Lambert, Director-General of the CBI, said: “I don’t think this is going to be the worst time for the UK economy in 60 years.

“We are in for a tough time through to the end of next year and maybe after that. But there are strengths in the UK economy and we need to remember that. It is going to be uncomfortable but it is not going to be the worst time for such a long time. Chancellors usually talk up the economy. It is quite a surprise to have it the other way round.”

David Frost, Director-General of the British Chambers of Commerce (BCC), said: “Speaking as someone who was around in the Eighties and Nineties, this does not feel anything like the problems we had then, let alone for the past 60 years. I am a bit surprised that the economy is being painted as such a bleak picture.”

Steve Radley, chief economist at EEF, the manufacturers’ organisation, said: “These remarks, which were open to some interpretation, are in danger of becoming a self-fulfilling prophecy because of the impact on confidence at a time when the UK market is becoming more difficult to sell into.”

Economists were also baffled by the Chancellor’s comments. Geoff Dicks, chief UK economist at RBS, said: “I do think financial conditions are particularly difficult and this, combined with high oil prices, makes policy decisions tricky.

“But the economic outlook is nowhere near as bad as the early 1990s or early 1980s, although we are more ambitious about keeping inflation low these days.”

Roger Bootle, of Capital Economics, said: “The idea of a Chancellor talking up the chances of a recession is new to me.”

Martin Weale, director of the National Institute of Economic and Social reform, said: “The idea that things could be the worst they have been for 60 years is very surprising – maybe in the October [Pre-Budget Report] he will implement rationing. But perhaps he is laying the ground for breaking the Government’s fiscal rules and explaining why they are broken.”

Tony Woodley, joint general secretary of Unite, said: “If the Chancellor is gauging the situation correctly then it makes the case for decisive government intervention in the economy even more strongly.

“If it is the worst economic conditions for 60 years then we need intervention in the form of a windfall tax on the oil companies and action to protect people from the risk of redundancy and to protect their homes.”

Diary dates

Thursday Mr Brown will address the concerns of the business community, ruffled by Mr Darling’s gloomy forecasts, in a speech to the Scottish CBI

Friday The Prime Minister attends the Trade Union Congress annual conference in Brighton. Although not formally addressing the meeting, he may use a private dinner as another platform to continue his political fightback

September 23 Speech to the party conference in Manchester

October Pre-Budget Report expected

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